Whenever there is a crisis, there are always unscrupulous people out there ready to take advantage of it. With the onset of the housing crisis and the enormous rise in foreclosures, there has been a corresponding rise in the number of “foreclosure rescue” schemes. “They're everywhere,” says Patricia Garcia Duarte, President of the nonprofit Neighborhood Housing Services of Phoenix. “They're very slick and they really know how to market to vulnerable people.” Complaints about these outfits are flooding Better Business Bureau chapters, state attorney generals and consumer protection offices. “The amount of foreclosure rescue fraud is at unprecedented levels,” said David Lim, a deputy district attorney from Alameda County. “We’re seeing a lot of misinformation being sent to homeowners. We’re seeing unlicensed agents acting as legitimate companies, working through mass mailers sent to homeowners facing foreclosure.” “The number of suspicious entities defrauding consumers may be in the thousands across the state,” said Tom Papageorge, of the chief consumer protection division in the Los Angeles District Attorney’s Office.” Foreclosure rescue scams are being taught in get-rich-quick seminars around the country. Homeowners facing foreclosure need to protect themselves as much as possible. The best protection is accurate information.

They Take Your Money Up Front. The Obama Administration has just launched a new website as part of its housing rescue plan. (www.makinghomeaffordable.gov). In that website, the government warns homeowners about these schemes. “BEWARE OF FORECLOSURE RESCUE SCAMS–HELP IS FREE! Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay –walk away! “ The Federal Reserve Board has recently produced a commercial about these outfits that it will be running in selected movie theaters across the country. The Board warns people about these companies. “Do not agree to work with a counselor who collects a fee before providing you with any services or who accepts payment only by cashier's check or wire transfer.” The Office of the Comptroller of the Currency also advises people to stay away from foreclosure rescue “experts.” “What these scams do is take your money, ruin your credit record, and wipe out any equity you have in your home.” The Federal Trade Commission, who often prosecutes these companies, also warns against them. “Unfortunately, once most of these foreclosure fraudsters take your money, they leave you much the worse for wear.” The Office of the United States Trustee, which is part of the United States Department of Justice, that oversees the Bankruptcy Court, advises people to proceed with care if an individual or company “collects a fee before it provides services to you.” One of the FTC's “red flags” for identifying these schemes is any business that “collects a fee before providing you with any services.”

They Can't Do Anything for You. Harvard Law Professor and consumer law expert Elizabeth Warren, calls what these schemes offer a “cement life jacket.” The bottom line is that these outfits can’t do anything that you couldn’t do on your own. This is explained in a recent Federal Trade Commission warning to consumers. “The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their
personal financial information to a fraudster.” These alleged “experts” charge very high upfront fees and do very little, if anything to negociate with the mortgage company. California Senator Ellen Corbett recently said that these schemes “get money upfront for services they never provide, sometimes taking thousands of dollars, and offer a false sense of hope to these consumers. Not only are consumers out of money they can ill afford to lose, but they also end up short on time to work out solutions with their lenders.”

These “Counselors” Are Not Licensed Professionals. They Are Telemarketers. Professional credit counselors and attorneys have been around for a very long time. They are regulated and licensed. They have to have required training. These “companies” are brand new. The people you talk to over the phone are not trained professionals, they're telemarketers! If you're experiencing one of the largest crisis of your life, you need to sit down, face to face, with an experienced professional, not some salesman from a distant state. The Federal Reserve Board has issued warnings about these outfits “If you are approached by foreclosure counselors–by mail, phone, or in person–make sure the counseling agency is HUD-approved before you do business with them.” The Office of the Comptroller of the Currency has also issued similar warnings “They often refer to themselves with titles that sound official, such as “foreclosure consultant” or “mortgage consultant,” and market themselves as a “foreclosure service” or “foreclosure rescue agency.” The United States Trustee advises that you proceed with care if an individual or company “calls itself a “mortgage consultant”, “foreclosure service” or similar name.”

They Are Not Licensed, Regulated or Accountable to Anyone. Credit counselors and attorneys are accountable to the agencies that license them. The telemarketers are not accountable to anyone. Credit counselors and attorneys have rigorous training. The person you're talking to at one of these companies may have been selling TV's at Best Buy last week. If you’re talking to one of these companies ask the person if they are certified as a counselor by the Department Housing and Urban Development. They never are.

They Are Not Lawyers and So They Are Unable to Advise You on Your Legal Rights. People facing a financial crisis need the assistance of trained professionals, not sales pitches from telemarketers. Analyzing a person's financial condition involves making legal judgments that can not be made by non-lawyers. Taking advise from untrained sales people is very dangerous. Taking legal advise from these outfits is like taking medical advise from your local grocer.

They Can't Stop Foreclosure. Peggy Twohig, associate director of the Division of Financial Practices at the Federal Trade Commission says that anyone who guarantees a solution “should be viewed with suspicion.” No matter what these people tell you they are powerless to stop the foreclosure proceeding. In order to get your money they will promise you that they are able to stop the foreclosure. After your money is gone you will learn that the foreclosure proceeding continues. The Federal Trade Commission warns of this “The scam artist tells you that he can negotiate a deal with your lender to save your house if you pay a fee first. You may be told to contact your lender, lawyer, or credit counselor, and to let the scam artist handle all the details. Once you pay the fee, the scam artist takes off with your money.”

They Take Advantage of Vulnerable People. As the Comptroller of the Currency has warned “foreclosure con artists take advantage of people who have fallen behind on their mortgages and face foreclosure. Con artists know that people in these situations are vulnerable and likely to be desperate.” Unfortunately, when people are desperate they will believe just about anything. Just remember, if something sounds too good to be true, it probably is.

They Make Promises They Can't Keep. Ms.Twohig, of the Federal Trade Commission knows how these outfits work. “In all of these scenarios, consumers typically believe that the promise to ‘stop’ foreclosure and ‘save your home’ means a permanent solution that will allow them to keep their homes and save their equity,” she says. “Yet they still end up losing their homes.” The Federal Reserve Board urges caution for anyone who guarantees results. “A reputable counselor will not guarantee to stop the foreclosure process, no matter what your circumstances...but be wary of people who promise a sure thing.”

They Are Often the Subject of FTC and Attorney General Enforcement Actions. A brief review of the FTC website will show a number of enforcement actions against these schemes. Typically, the FTC will commence legal action to shut these outfits down and impose penalties on their owners. The Attorneys General of the states are also involved in bringing these legal actions. The FTC charged National Foreclosure Relief Inc. with falsely claiming that it will stop foreclosures. A Federal Court issued a restraining order against the illegal practices and froze the company’s assets. Consumers who called this company were told that negotiation with the lenders would begin once consumers paid a fee. After the fee was paid, the company failed to return consumers phone calls. Consumers who were able to reach someone, were falsely told that negotiations were under way. The Florida Attorney General under a new Florida law, recently filed a lawsuit against FMA Servicing, Inc. for falsely representing that it had relationships with mortgage lenders.

State Government Are Passing Laws Against These Schemes. Currently, 14 states have passed laws regulating these outfits. Massachusetts has outlawed them altogether. The Massachusetts Attorney general issued an emergency regulation to ban foreclosure rescue scams.

Get the real facts and know your options. There is a solution for you.

Call us today and we can help!

RETURN TO MAIN SELBACH LAW PAGE

 

*Under federal law we are considered to be a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.